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Federal Register / Vol. 72, No.

220 / Thursday, November 15, 2007 / Rules and Regulations 64129

Done in Washington, DC, this 8th day of method you use, please do not submit external auditor of the Funding
November 2007. your comment multiple times via Corporation review, attest, and report on
Kevin Shea, different methods. You may submit management’s assessment of internal
Acting Administrator, Animal and Plant comments by any of the following control over financial reporting. The
Health Inspection Service. methods: December 2006 rulemaking adding
[FR Doc. E7–22279 Filed 11–14–07; 8:45 am] • E-mail: Send us an e-mail at reg- § 630.5(d) did not receive any objections
BILLING CODE 3410–34–P to requiring an external auditor to report
• Agency Web site: http:// on management’s assessment of internal Once you are at the Web control over financial reporting in the
FARM CREDIT ADMINISTRATION site, select ‘‘Public Commenters,’’ then System-wide annual report to investors.
‘‘Public Comments.’’ Commenters did ask that the attestation
12 CFR Part 630 • Federal eRulemaking Portal: http:// reporting requirement be similar to that Follow the of Public Company Accounting
RIN 3052–AC40 Oversight Board (PCAOB) auditing
instructions for submitting comments.
Disclosure to Investors in System- • Mail: Gary K. Van Meter, Deputy standards, and we agreed. We further
Wide and Consolidated Bank Debt Director, Office of Regulatory Policy, explained that the external auditor’s
Obligations of the Farm Credit System Farm Credit Administration, 1501 Farm attestation report should conform to
Credit Drive, McLean, VA 22102–5090. other applicable industry standards,
AGENCY: Farm Credit Administration. • Fax: (703) 883–4477. Posting and which we identified as those regulations
ACTION: Direct final rule. processing of faxes may be delayed. As of the Securities and Exchange
faxes are difficult for us to process and Commission (SEC) implementing the
SUMMARY: The Farm Credit achieve compliance with section 508 of Sarbanes-Oxley Act of 2002 (Sarbanes-
Administration (FCA or we) issues this the Rehabilitation Act, please consider Oxley).2 Although the System is not
direct final rule amending our another means to submit your comment covered by the provisions of Sarbanes-
regulation on the external auditor’s if possible. Oxley, nor regulated by the SEC, we
assessment of internal control over You may review copies of comments generally regard SEC rules as the
financial reporting concerning the we receive at our office in McLean, industry standard in this area, and we
System-wide annual report to investors. Virginia, or from our Web site at continue to follow this same general
The effect of the amended rule is to Once you are in the approach with consideration given to
require the external auditor of the Web site, select ‘‘Public Commenters,’’ the unique cooperative structure of the
Federal Farm Credit Banks Funding then select ‘‘Public Comments,’’ then System.
Corporation (Funding Corporation) to select ‘‘Submitting a Comment’’ and On June 27, 2007, the SEC revised its
express an opinion on the effectiveness follow the instructions there. We will requirement regarding the external
of internal control over financial show your comments as submitted, but auditor’s attestation report.3 The SEC
reporting instead of reporting on for technical reasons we may omit items now requires the external auditor to
management’s assessment of internal such as logos and special characters. express an opinion directly on the
control over financial reporting. The Identifying information that you effectiveness of internal control over
amended rule implements recent provide, such as phone numbers and financial reporting instead of reporting
changes in industry practices. addresses, will be publicly available. on management’s assessment of internal
However, we will attempt to remove e- control over financial reporting. The
DATES: If no significant adverse
mail addresses to help reduce Internet SEC continues to require external
comment is received on or before
spam. auditors to evaluate whether
December 17, 2007, these regulations
management has included appropriate
shall be effective upon the expiration of FOR FURTHER INFORMATION CONTACT: disclosures in its assessment report.
30 days after publication in the Federal Wade Wynn, Policy Analyst, Office of Further, on July 25, 2007, the SEC
Register during which either or both Regulatory Policy, Farm Credit approved PCAOB Auditing Standard
Houses of Congress are in session. We Administration, McLean, VA 22102– No. 5, ‘‘An Audit of Internal Control
will publish notice of the effective date 5090, (703) 883–4414, TTY (703) 883– Over Financial Reporting That Is
in the Federal Register. If we receive 4434, or Laura McFarland, Senior Integrated With an Audit of Financial
significant adverse comment on an Attorney, Office of General Counsel, Statements.’’ 4 Auditing Standard No. 5
amendment, paragraph, or section of Farm Credit Administration, McLean, is intended to increase the accuracy of
this rule, and that provision may be VA 22102–5090, (703) 883–4020, TTY financial reports and reduce costs by
addressed separately from the (703) 883–4020. making audits more risk-based and
remainder of the rule, we will withdraw SUPPLEMENTARY INFORMATION: scalable to company size and
that amendment, paragraph, or section
I. Background complexity. Auditing Standard No. 5
and adopt as final those provisions of
requires the external auditor to form an
the rule that are not the subject of a The FCA adopted a final rule on opinion on the effectiveness of internal
significant comment. In such a case, we December 20, 2006, amending our control over financial reporting except
would then tell you how we expect to disclosure and reporting requirements in the circumstance of a scope
continue further rulemaking on the for Farm Credit System (System) limitation that would result in the
provisions that were the subject of institutions.1 As part of that rulemaking, auditor disclaiming an opinion. The
significant adverse comment. we added a requirement in § 630.5(d) to
ADDRESSES: We offer a variety of include a report by management 2 Pub. L. 107–204 (July 30, 2002).
methods for you to submit comments. assessing the effectiveness of internal 3 72FR 35310 (June 27, 2007).
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For accuracy and efficiency reasons, we control over financial reporting in the 4 Auditing Standard No. 5 supersedes Auditing

encourage commenters to submit System-wide annual report to investors. Standard No. 2, ‘‘An Audit of Internal Control Over
Financial Reporting Performed in Conjunction With
comments by e-mail, through the We also added a requirement that the an Audit of Financial Statements’’ for all audits of
Agency’s Web site, or the Federal internal control ending on or after November 15,
eRulemaking Portal. Regardless of the 1 71 FR 76111 (December 20, 2006). 2007.

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64130 Federal Register / Vol. 72, No. 220 / Thursday, November 15, 2007 / Rules and Regulations

external auditor generally disclaims an during the comment period. A PART 630—DISCLOSURE TO
opinion when significant limitations significant adverse comment is one INVESTORS IN SYSTEM-WIDE AND
prevent him from performing all the where the commenter explains why the CONSOLIDATED BANK DEBT
tests necessary to complete the audit rule would be inappropriate (including OBLIGATIONS OF THE FARM CREDIT
and render an opinion. Auditing challenges to its underlying premise or SYSTEM
Standard No. 5 also requires the approach), ineffective, or unacceptable
external auditor to modify his or her ■ 1. The authority citation for part 630
without a change. In general, a
opinion on the effectiveness of internal continues to read as follows:
significant adverse comment would
control over financial reporting if the raise an issue serious enough to warrant Authority: Secs. 5.17, 5.19 of the Farm
auditor determines that management’s a substantive response from the agency Credit Act (12 U.S.C. 2252, 2254).
assessment is not fairly stated. in a notice-and-comment proceeding. Subpart A—General
II. Funding Corporation External We believe that a direct final
Auditor’s Attestation of Internal rulemaking is the appropriate method ■ 2. Revise § 630.5(d)(2) to read as
Control Over Financial Reporting for amending § 630.5(d)(2) to conform to follows:
The FCA is amending § 630.5(d)(2) to new industry standards. We do not § 630.5 Accuracy of reports and
conform with applicable industry anticipate there will be significant assessment of internal control over
standards for auditor attestations on adverse comments. We received no financial reporting.
internal control over financial reporting. objectionable comments to the * * * * *
The requirement in § 630.5(d)(2) for the December 2006 rulemaking that added (d) Management assessment of
external auditor of the Funding the requirement for an external auditor internal control over financial reporting.
Corporation to review, attest, and report attestation, which conformed with SEC
on management’s assessment of internal * * * * *
requirements at the time. Further, we (2) The Funding Corporation must
control over financial reporting is no stated at that time our intent to remain
longer consistent with industry require its external auditor to issue an
consistent with industry standards in attestation report, which must express
standards. Industry standards now this area, and commenters agreed. If,
require attestation reports to opine on an opinion on the effectiveness of
however, we receive a significant internal control over financial reporting.
the effectiveness of internal control over
adverse comment during the comment The resulting attestation report must
financial reporting. The amendment in
this rulemaking will conform with these period, we will publish a notice of accompany management’s assessment
new standards. withdrawal of the relevant provisions of and be included in the annual report.
The provision of § 630.5(d)(2), as this rule that will also indicate how Dated: November, 8, 2007.
amended by this direct final further rulemaking will proceed. If we
Roland E. Smith,
rulemaking, requires the external receive no significant adverse comment,
Secretary, Farm Credit Administration Board.
auditor of the Funding Corporation to we will publish notice of the effective
date of the rule following the required [FR Doc. E7–22312 Filed 11–14–07; 8:45 am]
include in the attestation report, an
opinion on the effectiveness of internal Congressional waiting period under
control over financial reporting. The section 5.17(c)(1) of the Farm Credit Act
revised requirement reduces confusion, of 1971, as amended.
clarifies reporting, and more effectively DEPARTMENT OF TRANSPORTATION
communicates the external auditor’s IV. Regulatory Flexibility Act
responsibility in relation to Federal Aviation Administration
Pursuant to section 605(b) of the
management’s process and necessarily Regulatory Flexibility Act (5 U.S.C. 601
conveys whether management’s 14 CFR Part 39
et seq.), FCA hereby certifies that the
assessment is fairly stated. direct final rule will not have a [Docket No. FAA–2007–28380; Directorate
III. Direct Final Rule significant economic impact on a Identifier 2007–NM–088–AD; Amendment
39–15254; AD 2007–23–08]
We are amending § 630.5(d)(2) by a substantial number of small entities.
direct final rulemaking. The Each of the banks in the Farm Credit RIN 2120–AA64
Administrative Conference of the System, considered together with its
United States recommends direct final affiliated associations, has assets and Airworthiness Directives; Boeing
rulemaking for Federal agencies to enact annual income in excess of the amounts Model 747–400, 747–400D, and 747–
noncontroversial regulations on an that would qualify them as small 400F Series Airplanes; Model 757–200
expedited basis, without the usual entities. Therefore, Farm Credit System Series Airplanes; and Model 767–200,
notice and comment period.5 This institutions are not ‘‘small entities’’ as 767–300, and 767–300F Series
process enables us to reduce the time defined in the Regulatory Flexibility Airplanes
and resources we need to develop, Act. AGENCY: Federal Aviation
review, and publish a final rule while Administration (FAA), Department of
still affording the public an adequate List of Subjects in 12 CFR Part 630
Transportation (DOT).
opportunity to comment or object to the Accounting, Agriculture, Banks, ACTION: Final rule.
rule. banking, Organization and functions
In a direct final rulemaking, we notify SUMMARY: The FAA is adopting a new
(Government agencies), Reporting and
the public that the rule will become airworthiness directive (AD) for certain
recordkeeping requirements, Rural
final on a specified future date unless Boeing Model 747–400, 747–400D, 747–
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we receive significant adverse comment 400F, 757–200, 767–200, 767–300, and

■ For the reasons stated in the preamble, 767–300F series airplanes. This AD
5 Recommendation 95–4, referencing the
part 630 of chapter VI, title 12 of the requires inspecting to determine the
Administrative Procedure Act ‘‘good cause’’
exemption at 5 U.S.C. 553(b)(B), (adopted June 15, Code of Federal Regulations is amended date code of the time delay relay for the
1995). as follows: cargo fire suppression system, and

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